Summary

Introduction

With more than 19 billion dollars in the bank, Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud owns the largest fortune in Saudi Arabia and, according to the Forbes rich list for March 2010, the 19th largest in the world. Far behind Carlos Slim or Bill Gates (about 53 billion dollars) he can be compared to the second largest French fortune, Liliane Bettencourt (20 million dollars). A real “Arab Warren Buffet” according to Time[+]NoteThe biography states that the term “Arab Warren Buffet” was used for the first time by the New York Times in 1999 (p. 99).[1], King Abdullah’s nephew is known in France for his investments in Disneyland Paris and for the purchase of the prestigious George V Hotel. Across the Atlantic he has holdings in Citigroup, Pepsico, Apple, Hewlett Packard, eBay and News Corp. In the Middle East, his name is linked to the television channels LBC and Rotana, to agro-food group Savola, to the finance and banking institution Samba and even to Tasnee. All his diverse business dealings are grouped together under the aegis of his company, the Kingdom Holding Company (KHC).

Like many a self-made man, Alwaleed is a source of fascination. First of all for the business world, then for the media and over the last few years, for a less specialised public. There is no doubt about it, Alwaleed is the quintessential “television hero”: a mysterious billionaire, for his life is one that is out of the ordinary – even extraordinary – a story imbued with charismatic individuality to be shared with others. And while his Communications Department knows exactly how to package it together, the media are just as ready to lap it up. This is no doubt what prompted the journalist, Riz Khan, an enthusiastic interviewer of the rich and famous, to write the biography of this unusual Saudi, Desert Prince[+]NoteRiz Khan is a journalist. He worked for the BBC and became particularly well known through his broadcasts on the US channel CNN Q&A with Riz Khan. He is currently the anchorman of the Riz Khan Show on Al Jazeera English. See his articles for Al Jazeera online.[2]. Although open to criticism, this is to date the most well-researched, the most complete, the most relevant and the most personal portrait of the Prince. And it is for that reason that is worth our while to dwell on it.

The call of the banks

Alwaleed apparently made his first foray into the world of business armed with 30,000 dollars [+]Notee"Alwaleed says that his initial start-up sum was $30,000 from his father, which worked out to be just enough for him to set up his company, Kingdom Establishment, in 1980", p. 44X[3], which was a rather modest amount, given his royal pedigree. To increase business, he applied for a loan from the Saudi American Bank which lent him 300, 000 dollars. Alwaleed launched himself in the world of Saudi Arabian real estate and construction. Thanks to the profits generated, the Prince soon wanted to “move things up a notch” [+]Note« Prince Alwaleed knew he needed to leap to another level if he was going to be a serious player, someone who shaped the markets and was not simply led by them. », p. 59[4]. And his future sphere of operations was staring him right in the face: banking, the “eye” of the economy. Thus began his investigation into the national banking sector. Because, while Alwaleed had the cash, he didn’t want to spend it haphazardly, much preferring the long-term to the short-term, even if it meant foregoing possible profits for the first few years. Finally he made his choice – the United Saudi Commercial Bank (USCB), teetering on the brink of bankruptcy, of which he bought up 7 % in 1986. This hostile takeover bid took the Saudi banking sector by surprise. It had never known anything like it. In 1988, the USCB’s accounts were back in the black, and it even became the “most profitable” Saudi Arabian bank in 1989 [+]Notep. 66[5]. The Prince naturally increased his shareholding to 30%.

Thereafter, the pace quickened. Alwaleed carried out a very similar operation on the Saudi Cairo Bank (SCB). Emboldened by the success of this second deal and by the resulting financial spin-offs, he was keen to expand outside the confines of Saudi Arabia and go international. He bought up 250 million dollars worth of shares in various banks (Chase Manhattan, Citicorp, Manufacturers Hanover and Chemical Bank). But the Prince took the long view: he was aware that to generate more profit, he would have to take on more risk [+]Notee"He realized he needed a more dramatic strategy than that to achieve a proper, high-value return", p. 75X[6]. In 1990, he decided to invest all his capital in Citicorp and sold off his shares in the other banks. Taking advantage of Citicorp’s poor financial situation, he succeeded in buying up 4.9% of the bank’s capital with 207 million dollars. With this spectacular media and financial coup, Alwaleed established himself as a force to be reckoned with and thus became the “Desert Prince”, who, on American soil, increased his wealth many times over. His stakeholding has obviously increased since then and today is thought to be around the 15% mark – which means that every fluctuation in share value of around 3 to 4 dollars (upwards or downwards) may impact upon his personal fortune by 600 to 700 million dollars [+]Noteep. 98X[7].

The hotel business: “The sky’s the limit”

After the banking sector, Alwaleed set his sights on his new hobby horse: the hotel sector. He purchased shares in the Four Seasons Hotels Management Company and in the Fairmont’s Management Company, because of their potential and their prestigious names. An ambitious man, he teamed up in 1994 with a Singaporean investor, Kwek Leng Beng, and bought 42% of Plaza Hotel in New York for around 325 million dollars [+]Notep. 113[8]. In 1996, Alwaleed acquired the highly prestigious George V Hotel in Paris for 185 million dollars, and had no qualms about throwing in a 120 million-dollar cheque to have it fully renovated [+]Notep. 117[9]. His objective: to turn it into “the best hotel in the world” – nothing less. But while Alwaleed knows when the time to buy is right, he has no qualms about selling his shares when a sufficiently attractive offer is made. Lastly, according to the economic press, Alwaleed bought up 43.7% of the shares in the Four Seasons Hotel in Cairo via the Egyptian company, TMG. The total estimated value of the sale is 145 million dollars (12). Similarly, in 1995, he acquired shares in the London business district of Canary Wharf for 63 million. He subsequently sold off two-thirds in January for 192 million. “Business is business”. Without listing all the transactions that Alwaleed has been involved in, suffice it to say he is believed to have had in his possession, in April 2004, more than a billion dollars worth of shares in the hotel and real estate sectors [+]NoteAccording to Riz Khan, p. 115[10] – which remains a significant part of his portfolio, if not the largest.

Media: a strategic sector that Alwaleed is fond of

The core message of Alwaleed’s biography is clear: he keeps constantly abreast of the latest developments in current affairs. Whether between two continents in his jet, on holiday on his yacht in Cannes or under his Bedouin tent deep in the Saudi desert, he needs to know what is going on. As a news addict, he is well aware that the world continues to spin on its axis, with or without him – and the economy, too. This special relationship that he entertains with the media has without doubt helped him in investing in strategic sectors, as much in hard news as in entertainment. In 1993, Alwaleed bought up 30 % of the Arab Radio and Television Network’s (ART) shares for 240 million dollars [+]Notep. 144[11]. He is particularly interested in its music channel, ART music. A few years later, he acquired a 100% stakeholding in the Rotana Audiovisual Company, which includes, amongst others things, the largest music label of artists in North Africa, the Near and Middle East. But while his interest in Rotana grew and he pumped an increasing amount of cash into it, he began to have doubts about ART’s potential. The consequence was that he reduced his shareholding to 5 % in 2003 and transformed ART Music into a new Arabic-speaking music channel, broadcasting 24 hours a day. It was christened Rotana Music Channel , which he fully owned. Since then Rotana both expanded and diversified. The channel, which was compared to MTV, became a global media group with 6 TV channels, each targeting a different niche audience [+]NoteeThe most up-to-date information on Rotana comes from Alwaleed in conversation with Forbes: “One of my biggest personal holdings is Rotana. That company is a very dominant force in the Middle East. It owns around 45% of all the movie industry and around 75% of all the music. And this is doing extremely well. It's growing around 14 to18% every year and has top, top revenues.” See the interview online.X[12].

In 2003, he also did not hold back from buying 49 % of the Lebanese Broadcasting Corporation (LBC) [+]NoteeAlwaleed increased his holdings in LBC in 2008. He now holds 85 % of the Lebanese channel. See “Prince Al Waleed Bin Talal acquires 85% of LBC”.X[13]. However, while the Prince could never survive without a television set in range, he was not able to do without printed news media either. And it was chiefly in Lebanon where he invested, acquiring an interest in An Nabar (17%) and in Ad-Diyar (25%). Global in scope, Alwaleed’s assets were not limited to the Middle East. He owned, for instance, 2.3% of the capital of Mediaset (founded and controlled by Silvio Berlusconi), acquired for 100 million dollars. The Prince had also been investing for a long time in News Corp, and at this time, owns 7% of the capital in Rupert Murdoch’s company, i.e. the equivalent of 3 billion dollars. For his part, Robert Murdoch, bought up 9.7 % of Rotana’s capital for a total of 70 million dollars. This alliance, much commented upon by the American media, was to be extended with the launch of a new 24 hour news channel in Arabic. It remains to be seen whether Fox News will be fully and officially associated with this initiative [+]NoteeSee “Saudi Prince Alwaleed bin Talal Announces Arabic News Channel Collaboration With Fox News” and “Saudi Prince Alwaleed to launch TV news channel”. X[14].

Conclusion

An unending list of impressive figures and of countless millions – and even then we are far from having listed even the bulk of the financial undertakings of the Prince. Only the most important have been mentioned. Via his investments, Alwaleed has established a foothold in strategic sectors, which can generate much in the way of revenue, in particular in banks and hotels. But in economic lean times, such a strategy cuts both ways. According to Forbes, Alwaleed’s company, the Kingdom Holding Company, apparently sustained a loss of 8 billion dollars in 2008, with the consequence that the Prince slipped from 4th in 2004 to 22nd in 2009 in the World’s Richest Men list.

Riz Khan, as for himself, did not witness his slide down the rankings and was not able to cover it in his biography, published in 2005. With hindsight, the book strangely resembles a snapshot of Alwaleed at the height of his glory. However, while this journalist has provided the most detailed and complete account of the Prince’s life, it nevertheless remains a well-spun piece of storytelling. All the ingredients of a classical narrative are there, with Alwaleed portrayed as a modern-day hero. Both an official and authorised biography, this work may be read or be perceived as a form of eulogy or attempt at glorification, aiming to create a myth about the man and his life. Over-the-top in its choice of words, descriptions and facts selected and presented, this may make the book appear slightly manipulative to the attentive or critical reader – an impression borne out by the fact that Alwaleed’s Communication department uses this biography and never misses an opportunity to distribute it [+]Note“As I left the kingdom of Al Waleed, I put my head round the door of Shadi Sanbar’s office. He handed me a collection of gifts in a fine green leather bag stamped Rotana [...] In a Starbucks cafe I opened my leather bag. There was a Rotana coffee-mug, a Rotana ballpoint, a group Annual Report and the biography of Al Waleed in Arabic by the journalist Riz Khan”, in Mainstream, Frederic Martel, Flammarion, pp 365-366.[15]. And yet, the fact is that it is a highly instructive read shedding light on the personality, life and business dealings of this individual whose goal it still remains to become the Richest Man in the World.

1. The biography states that the term “Arab Warren Buffet” was used for the first time by the New York Times in 1999 (p. 99).

2. Riz Khan is a journalist. He worked for the BBC and became particularly well known through his broadcasts on the US channel CNN Q&A with Riz Khan. He is currently the anchorman of the Riz Khan Show on Al Jazeera English. See his articles for Al Jazeera online.

3. e"Alwaleed says that his initial start-up sum was $30,000 from his father, which worked out to be just enough for him to set up his company, Kingdom Establishment, in 1980", p. 44X

4. « Prince Alwaleed knew he needed to leap to another level if he was going to be a serious player, someone who shaped the markets and was not simply led by them. », p. 59

5. p. 66

6. e"He realized he needed a more dramatic strategy than that to achieve a proper, high-value return", p. 75X

7. ep. 98X

8. p. 113

9. p. 117

10. According to Riz Khan, p. 115

11. p. 144

12. eThe most up-to-date information on Rotana comes from Alwaleed in conversation with Forbes: “One of my biggest personal holdings is Rotana. That company is a very dominant force in the Middle East. It owns around 45% of all the movie industry and around 75% of all the music. And this is doing extremely well. It's growing around 14 to18% every year and has top, top revenues.” See the interview online.X

15. “As I left the kingdom of Al Waleed, I put my head round the door of Shadi Sanbar’s office. He handed me a collection of gifts in a fine green leather bag stamped Rotana [...] In a Starbucks cafe I opened my leather bag. There was a Rotana coffee-mug, a Rotana ballpoint, a group Annual Report and the biography of Al Waleed in Arabic by the journalist Riz Khan”, in Mainstream, Frederic Martel, Flammarion, pp 365-366.